ey global ipo trends report q3 2013

8/14/2019 EY Global IPO Trends Report Q3 2013

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Contacts:

Maria PinelliGlobal IPO Leader

[email protected]

Jacqueline KelleyAmericas IPO Leader

[email protected]

Ringo Choi

[email protected]

Dr. Martin SteinbachEMEIA IPO [email protected]

Shinichiro SuzukiJapan IPO Leader

[email protected]

EY Global IPO TrendsReportQ3 2013

Welcome

Welcome to the new-look quarterly EY Global IPO Trends report, which provides extensive

commentary on listings activity across the world and analysis of key drivers from EYs

Global IPO network.

Despite a comparatively quiet third quarter in line with historical trends of slower activity

over the months of July through September we expect global IPO activity to lift through

the remainder of the year and into 2014. The uplift in activity could vary from region to

region both in terms of timing and pace.

Average deal size continues to trend lower, because of the high number of health care

and technology IPOs that came to the public markets. Pricing remains a top concern for

softer economic fundamentals, but we are seeing improvement year-on-year.

Europe is seeing more mid-sized and large IPOs, with private equity a key driver, particularly

receding, market volatility has subsided and valuations are improving. The conditions are

The ongoing suspension of new listings on mainland China exchanges has affected IPO

economic and market conditions. However, conditions in the region are expected to improve

such as Thailand, Singapore, Malaysia and to an extent Indonesia.

We hope that the analysis and perspectives contained in this report will be of use to all

participants in the capital markets but, should you require further insight, please contact

me or the EY IPO Leader in your region.

Maria Pinelli

Global Vice Chair

Strategic Growth Markets

EY


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2 |

Global IPO activity is projected to reach 197 deals with IPO

expected to be down 4% in terms of deal numbers and 47%

activity is projected to be slightly higher by deal numbers but

48 44 29 42 40 63 48

109 131125

112 84

78

78

44

60

32 39

32

58

28

3

7

57

7

7

6

0

50

100

150

200

250

Numberofdeals

North America

EMEA Central and South America

Q112 Q212 Q312 Q412 Q113 Q213 Q313

Quarterly IPO deals by region*

6,280 23,333 4,109 9,725 9,079 13,791 8,773

7,915

15,494

19,240

14,617 5,668

17,942

5,436

3,476

1,886

1,223

9,777

6,705

6,702

2,470

325

3,090

5,017

3,059

2,881

7,776

1,568

0

5,000

10,000

15,000

20,000

25,000

30,000

35,000

40,000

45,000

50,000

Q112 Q212 Q312 Q412 Q113 Q213 Q313

Proceeds(US$m)

North America

EMEA Central and South America

Quarterly IPO proceeds by region*

a story of two halves. In July and August, signs of improvingmacroeconomic conditions, particularly in the developed

economies, coupled with ultra-low interest rates and new

indications from major central banks that they would keep

monetary conditions loose for longer, were all supportive of

public listings. This combination saw market volatility decline

12.94% at the start of August. Equity indices and IPO activity

gathered steam concurrently, with the S&P 500 hitting its

months of 2012.

investor concern grew on impending monetary tightening

soon begin to taper its asset purchase program, potentially

driving volatility higher and putting risk assets, especially

in the emerging markets, under pressure. Following hints

concerned about the economy. In the near term there may be

some upside, particular in the emerging markets, from where

in search of higher yields. However, the expectation is that a

reduction in stimulus will begin at some point this year.

Global IPO activity Q3 analysis

Global IPO activity softer in Q313, though theunderlying improving trend is intact

Total

Number of deals 206 197 566

Capital raised

46.2 24.4 94.9

Average deal size

167.7

% Increase /

decrease

JanSep

vs 2012JanSep

Number of deals -11.1% -4.4%

Capital raised -17.7%

2013 Global IPO activity by quarter

expected IPOs by end of September. . Source: Dealogic.

Source: Dealogic.

Source: Dealogic.


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Issuer Name Sector Capital raised

Exchange(s)

Envision Healthcare

Holdings Inc

Health care 1,110.9 New York

(NYSE)

American Homes 4

New York

(NYSE)

Frank's International

NV

Energy 759.0 New York

(NYSE)

Deutsche Annington

Immobilien GmbH

Deutsche

Borse

Z Energy Ltd Energy 677.0 Australia

(ASX)

Energy 495.2 New York

(NYSE)

QEP Midstream

Partners LP

Energy New York

(NYSE)

475.9 Singapore

(SGX)

Singapore

(SGX)

Phillips 66 Partners LP Energy New York

(NYSE)

Q313 Top 10 global IPOs by capital raised

Sector Number

of deals

% of global

deal

number

Capital

raised

% of

global

capital

raised

Energy 21 5,601.7

20 12.5% 4,566.9 25.0%

Health care 14.4% 12.6%

Industrials 19 11.9% 7.9%

Technology 22 5.1%

Financials 16 10.0% 4.7%

5.0% 4.5%

Media and

entertainment

6 714.1

Consumer staples 5.0%

Materials 9 5.6% 269.5 1.5%

Consumer products

and services

6 26.2 0.1%

Telecommunications 2 11.6 0.1%

Global total 160 100.0% 18,246.9 100.0%

Q313 global IPOs by sector

Signs of softer economic prospects in key emerging markets,

including India and Brazil, alongside new global geopolitical

concerns in Syria and Turkey, did not help investor sentiment.

1

in September 2011.

underlying improving trend in global IPO activity is intact.

1

September, according to Dealogic data.

2

price, was at 4.5%2

Source: Dealogic.

Source: Dealogic.


4/14

4 |

9%

22%

16%

25%

6%

13%

10% 9%

42%

25%21%

14% 12%

4%0%

-9%

-20%

-10%

0%

10%

20%

30%

40%

50%

%Equitymarketret

urnsyear-to-date

2012 YTD return 2013 YTD return

GDP growth in the major developed economies in the coming

at a solid pace, and recent export and manufacturing indicators

production and export data are stronger. Japan has also

bounced back, reporting solid GDP gains and rising trade and

manufacturing.

The OECD composite leading indicator rose to 100.7 on its

latest reading, pushing further above its long-term average

level of 100.0, to its highest level since April 2011.

The outlook for emerging markets is softer. The OECD leading

indicator suggests slowing momentum in major emerging

economies, including Brazil and India. However, other leading

result, weaker performance in emerging economies in the near-

term should not derail the better overall global outlook.

Outlook for Q4

An improving global economic outlook issupportive for IPO activity in Q413, althoughmonetary policy changes may heighten

uncertainty

-2

-1

0

1

2

3

4

5

6

0

100

200

300

400

500

600

Number of IPOs OECD +6 Major EmergingEconomies Leading Indicator

NumberofIPOs

Year-on-yeargrowth

Q210

Q310

Q410

Q111

Q211

Q311

Q411

Q112

Q212

Q312

Q412

Q113

Q213

Q313

Q413

Q114

OECD Leading indicator growth vs. number of IPOs

Stronger performance in equities in many developed

The combination of these factors is supportive for equity

outlook for global monetary conditions. Extremely loose

monetary policy at the worlds major central banks is expected

to stay in place for several quarters yet. The prospect of the

program potentially before the end of the year does not

represent a step-change in policy. Tapering is expected to be

very gradual, and the cautious tone of communications from

doing whatever is necessary to support economic growth.

Crucially, recent economic data, while improving, is not

expected to prompt a change in thinking from central banks

on interest rates. Jobs growth and other fundamentals are still

have some breathing room. As a result, interest rates areexpected to remain at record lows for the foreseeable future.

This combination of better growth and easy monetary

conditions is ultimately supportive for equity capital markets.

Conditions could remain volatile near-term, until investors have

more clarity on what tapering will actually look like. Emerging

markets in particular could feel the pressure, as investors

process the implications for their portfolios of a wind down in

monetary stimulus. However, barring a large deviation from

this outlook, market volatility is not expected to increase.

Investors have been encouraged by

rising valuations, but pricing remain acritical concern. More than ever, pre-IPOcompanies need strong brand names

or earnings track records to obtainappropriate pricing and secure investor

Maria Pinelli | Global Vice Chair,Strategic Growth Markets, EY

Source: OECD.stat, Dealogic.

Source: S&P Capital IQ.


5/14

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24%16% 15% 18%

21% 25% 19%

76%84% 85% 82%

79% 75% 81%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Financial sponsored Corporate deals

Q112 Q212 Q312 Q412 Q113 Q213 Q313

Financial sponsored backed vs Corporate IPO deals

27

38

27

63

24

47

22

26

35

26

20

26

32

40

22

10

20

30

40

50

60

70

NumberofIPOs

Q110

Q210

Q310

Q410

Q111

Q211

Q311

Q411

Q112

Q212

Q312

Q412

Q113

Q213

Q313

Global PE-backed IPOs by quarter*

IPO activity should lift in Q413

In this environment, global IPO activity is expected to lift in the

still-loose global monetary policy settings and steadying market

volatility suggest a wider window for new listings in the coming

This would be in line with Q412 levels, with policy uncertaintysuggesting the path to recovery in the IPO markets may not be

a smooth one, despite a better economic backdrop.

From region to region, the recovery could be uneven both in

terms of timing and pace. In particular, the continued prospect

monetary conditions could drive some divergence in IPO

There is further potential downside for emerging markets in the

coming months, though this is not expected to be substantial

given the recent sell-off. Slower economic growth in some

emerging markets, alongside the prospect of central bank rate

rises in order to stabilize exchange rates, would be unfavorable

in institutional investors appetite for new listings. At the same

time, improving economic conditions and investor interest in

track records to obtain appropriate pricing and secure investor

and operator of business-to-business online market-place

Alibaba are expected later this year or in 2014.

PE-backed IPOs should also gain pace

market trends closely in recent quarters. This is expected to

level of volatility in the equity market holds steady.

PE-backed deals were an important part of the rising trend in

above their expected ranges.

global market. PE-backed offerings slowed to 22 deals in the

that suggest PE-backed deals should rise. Filings are on an

companies waiting to go public. As at 20 September, there

are 75 companies in active registration, which could raise

also been minimal this year. In addition, the solid aftermarket

performance of recent listings is an important catalyst for

PE investors to take companies public. The large overhang of

companies acquired during pre-recession years should also

Source: Dealogic.

* Based on priced IPOs as of 19 September. Source: Dealogic.


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6 |

IPO activity in terms of volume of activity and proceeds

global total capital raised.The largest deal worldwide in

technology sectors were the next most active sectors from a

deal volume and value perspective.

balanced year for global IPO activity, with a diverse mix of

sectors likely to continue to drive new listings. The global IPO

pending, according to Dealogic data.

Still, some sectors are set to lead total activity higher in

higher market volatility drove increased postponements

and withdrawals. Several large listings are rumored heading

into the new quarter, though the timing of these deals is

unclear. Twitter Inc., for example, has announced plans foran IPO listing on 12 September. At the same time, conditions

sector has experienced solid improvement in earnings in

recent months, mainly in North America, where the backlog

quality and slowing writedowns suggest the sector should

continue to trend higher, which is supportive for new offerings.

attractive yields, should continue to support successful new

listings. In Europe however, there are not as many large targets

going forward. Yield plays should also drive another active

quarter for utilities and energy master limited partnerships.

There was a short-term correction mid-year, with uncertainty

withdrawals higher. However, with central bank rates set to

hold steady in the coming months, irrespective of any tapering

in quantitative easing programs, investor demand for income

should persist for some months yet.

Industry analysis

drive activity in Q413

16 1624

5

5

6

8

8

1

7

2

1

2

11

North America

EMEA

Central andSouth America

Asia-Pacic

$643

$1,551

$241

$2,330

1,293

$5,677

$1,811

$330

$75

$2

$452

North America

EMEA

Asia-Pacic

Financial*

Financial by number of deals


Q213

Financial by capital raised (US$m)

Q113 Q313

$2,435 $858$11,112

3

2

1

16

4

9

1

17

2

6

2

9

22 1931

North America

EMEA


Asia-Pacic

North America

EMEA

Asia-Pacic

Industrial*Industrial by number of deals


Q213

Industrial by capital raised (US$m)

Q113 Q313

$2,053 $1,438$8,045

$790

$730

$89

$443

$1,279

$1,134

$560

$5,072

$219

$321

$776

$122

Source: Dealogic.


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9

6

2

6

9

3

9

4

5

1

10

$1,418

$2,430

$1,067

$2,996

$1,564

$305

$2,555

$1,211

$1,267

$379

$1,710

23 2021

North America

EMEA


Asia-Pacic

North America

EMEA

Asia-Pacic

Real estate*

Real estate by number of deals


Q213

Real estate by capital raised (US$m)

Q113 Q313

$7,911 $4,567$4,423

$443

$36

$265

$451

$1,377

$120

$260

$593

$197

$135

4

3

1

8

9

6

5

7

8

7

16 2220

North America

EMEA


Asia-Pacic

North America

EMEA

Asia-Pacic

Technology*Technology by number of deals


Q213

Technology by capital raised (US$m)

Q113 Q313

$1,196 $925$1,757

$1,230

$4

$598

$251

$445

$318

$409

$1,507

$3,276

$420

$411

$1,495

4

2

1

5

2

4

1

5

9

2

1

9

12 2112

North America

EMEA


Asia-Pacic

North America

EMEA

Asia-Pacic

Energy*

Energy by number of deals


Q213

Energy by capital raised (US$m)

Q113 Q313

$2,083 $5,602$2,679

$2,879

$105

$101

$2,074

$614

$618

$2,037

$85

$184

6

4

5

14

10

7

16

3

4

15 2331

North America

EMEA


Asia-Pacic

North America

EMEA

Asia-Pacic

Health care*Health care by number of deals


Q213

Health care by capital raised (US$m)

Q113 Q313

$3,085 $2,307$3,305

Source: Dealogic.


8/14

8 |

Regional analysis

US continues its strong momentum and strongerIPO activity from Hong Kong and South East

The Americas

Strong US activity in Q3 with further upswing forecast,while conditions remain challenging in Central andSouth America

Total


Capital raised

14.7

Average deal size

260.4 219.4

% Increase /

decrease

JanSep

vs 2012JanSep

Number of deals 5% 141%

Capital raised -7% -19% 45%

number of deals and 49% by capital raised.

already surpassed last years total with 142 completed IPOs

of 2012 with both the second and third quarter deal volumes

greater this year than during the same periods last year. By

From a sector perspective, health care is expected to be the most

active sector by number of deals and ranks second by capital

health care sector, such as biotechnology and pharmaceutical

same time period of 5.0%.

The technology sector is expected to be the second most active

of the higher number of health care and technology IPOs that

Despite encouraging levels of activity and investor interest,

pricing remains a top concern for investors. Some pressure on

within range, almost 40% were at the lower end.

500 is currently trading at around 20 times reported earnings,

close to the highest level since April 2010. This combination

of attractive valuations and the solid aftermarket performance

industries.

Looking ahead, real estate IPOs are expected to continue to

cross-border listings a potentially important contributor to new

September was an important barometer of investor appetite

for social media listings and the outcome of the pending listing

further evidence of the level of investor interest. We also expect

to see IPOs in big data and cloud computing sub-sectors over

substantial contributor to IPO activity.

investor sentiment across the Americas region is mixed. IPO

activity in selected parts of Central and South America remain

and historically slower activity during the summer months.

in 2012, due to improvement in listing activity from Brazil and

Mexico exchanges.

expected IPOs by end of September. Source: Dealogic.


9/14

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Total


Capital raised

2.9 7.2 1.1 11.2

Average deal size

411.6 1200.1 227.5

% Increase /

decrease

JanSep

vs 2012

JanSep

Number of deals -17% 25%

Capital raised 176% 26%

EMEA

Positive signals in mature economies of Europe;PE a driver as larger deals dominate

IPO sentiment across Europe is improving. The region is

period in 2012. However, average deal size dropped slightly

months.

Germany where valuations are comparatively high and volatility

levels have subsided. European stock markets including the

program, all major European indices climbed again.

largest European IPO was German real estate group Deutsche

Market.

Conversely, in the emerging markets of Middle East and Africa,

smaller deals are prevailing. Middle East exchanges saw 10

be attributed to the slowdown in small- and mid-cap listings

in the Poland IPO market. There were two deals each on the

Warsaw main market and the junior market NewConnect in

market and 20 on NewConnect compared to six and 62 IPOs

Private equity remains an active driver, particularly of deals

have accounted for 17% of deal volume and 56% of proceeds,

a marked increase over 2012 where PE-backed deals combined

accounted for 10% of total proceeds for the full year. With

listings of PE-backed companies such as Grohe, Europes

biggest bathroom equipment maker, predicted to complete

slowed. After the worlds largest IPO this year (BB Seguridade

have slowed dramatically with just one IPO since. Slower market

conditions forced two big companies, Votorantim Cimentos SA

IPO activity on Mexican Stock Exchange has trended higher

over the last two years compared to previous high level in 2007

IPOs in 2012. Pricing a top concern forinvestors came under some pressure

higher and outperformed the S&P 500index. This points to sustained activity in

Jacqueline Kelley | Americas IPO Leader, EY



10/14

10 |

Asia

is encouraging

4while deal numbers are expected

suspension of new listings on mainland China continues to

affect IPO activity level in the region. There were lower IPO

quarter historically, this also weighed on total Asian proceeds

region, although Singapore was an exception with total

real estate offerings.

from 15 IPOs. Consumer staples, real estate and materials

were the most active sectors by number of deals, while media

and entertainment and consumer staples led by capital raised.

to conduct small and medium sized IPO deals, as well as

media and telecommunications, banking, retail and consumer

economy, coupled with very easy monetary conditions, should

support better activity in this market. More restrictive listing

listing rules takes effect.

4

Total


Capital raised

5.1 12.9

Average deal size

176.0 101.5 127.9

% Increase /

decrease

JanSep

vs 2012

JanSep

Number of deals -22% -29%

Capital raised 204%

prior quarters. In particular, economic data suggests steady

stabilizing and regional debt markets are steadying. These

conditions point to better valuations and suggest the coming

quarter could be a better time to go public in the region.

While real estate and technology are expected to be active

industries, with investor appetite for yield ready to support newlistings, there are no real sector clusters apparent in the region.

largest British offerings in recent years. Meanwhile, in the Middle

East, the Bank of London & the Middle East is set to list on the

Europe is seeing more mid-sized andlarge IPOs coming to the market, with

PE-backed IPOs being a key driver,particularly in the mature economies conditions stabilizing, market volatilityhas subsided and valuations are

improving. The conditions are right for

Martin Steinbach | EMEIA IPO leader, EY

expected IPOs by end of September. Source: Dealogic.


11/14

| 11

Total


Capital raised

5.5 15.7 6.4 27.5

Average deal size 74.2 252.4

% Increase /

decrease

JanSep

vs 2012

JanSep

Number of deals 26%

Capital raised -59% -67%

Prospects for new listings in the region are also more

conditions, led by the developed economies, important for

Investor appetite is likely to be strong for these offerings on the

back of recent stock price rises. Deal sizes are starting to trend

higher and PE-backed exits are on the rise. Companies expected

Co., Ltd. and electronics manufacturer Japan Display Inc., while

the life sciences and information technology sectors should also

see a number of offerings coming to market.

South East Asian exchanges are prominent in the pipeline of

expected global IPOs, second to North America by volume,

according to Dealogic data. We expect more IPO listings from

emerging markets such as Thailand, Singapore, Malaysia and,

to an extent, Indonesia.

prevailing on the Indian IPO market. Bombay Stock Exchange

government has indicated it will complete a program of state

owned asset sales before next years general election, with the

sale of as much as 49% of Meridian Energy Ltd., the nations

Nonetheless, uncertainty around this outlook is heightened,

anticipated plan to reduce its bond purchases on emerging

markets. A surge in bearish investor sentiment, and higher

market volatility, would mean fund managers could have

offerings. The success of big-ticket listings near-term, such

same time, a move from Chinas regulators to reopen the IPO

market would be a welcomed boost to the Asian IPO market.

Conditions in the region are expected to 2014 with a growing list of companies

planning to conduct large IPOs in Hong markets in Mainland China are re-opened.We also expect more IPO listings fromemerging markets such as Thailand,

Ringo Choi Growth Markets leader, EY

Loose monetary conditions are fueling

investor appetite for equities and JapaneseIPO activity is expected to accelerate in thecoming months as a result, with up to

Shinichiro Suzuki | Japan IPO leader, EY



12/14

12 |

Rapid-growth

Developed

Developed vs. rapid-growthEmerging markets

represent 8 of the top20 IPOs in 2013 Q3.

Three sectors trending

US$24.4bin capital raised(47% decrease on 2013 Q2)

197

(4% decrease on 2013 Q2)

Volume and value

deals globally

Maria Pinelli,Global Vice Chair, Strategic Growth Markets

More than 5,000companiesglobally, includingmore than1,000Asian companies

Pipeline is building

Despite a comparatively quiet third quarter,global IPO activity is expected to lift through

the remainder of the year and into 2014. The

uplift in activity will vary from region to region

both in terms of timing and pace.

Financial investors dominate

PE- and VC-backed IPOsdrive global deal activity.

PE and VC account for47% of US IPOs and 19%of global IPOs by dealvolume.

46%

Health careEnergy Real estate

US$4.6b(20 deals)

Global IPOhighlights2013 Q3

Commentary

Maria Pinelli,Global Vice Chair, Strategic Growth Markets

Investors have been encouraged by rising valuations

but moving forward, pricing remain a critical concern.

brand names or earnings track records to obtain

appropriate pricing and secure investor support.

Home and away17 of the top 20 were listedon their home exchanges.

Home

1 1

US$2.3b(23 deals)

US$5.6b(21 deals)


13/14

| 13

US tops the leaderboard

US issuers dominatedthe global IPO market,accounting for 45%of global funds raised.

Top three countries by deal volume

US GreaterChina

Number of deals

ranked 2nd by amountof global funds raised.

Asia-P

30%

41

16

46%

Top three exchanges by funds raised

New York

US$

NASDAQ Singapore

SGD

Envision HealthcareHoldings Inc.

(US)

US$1.1b US$0.8b

Asia-P

10

Volume of deals


NorthAmerica 30%

49%

3%

Conce continues to buildas the VIXfalls and thecentral banks stimulicontinue.

Rising equity markets are apositive for IPOs MSCIWorld Equities Index is up 16%since the end of 2012.

92% of global IPOspriced within or aboveexpectations.

Only 29 postponedor withdrawn IPOsin 2013 Q3, 40% downon 2012 Q3.

Conce is growing

VIX

2 Focus on open-price IPOs with deal value above US$50m.

EMEA 18%

Top 3 deals in 2013 Q3

American Homes4 Rent(US)

US$0.8bFrank's

International NV(US)

US$

Singaporeand UK

2

1


14/14

Find out more about future IPO prospects

For more information on global IPO performance

Global IPO Center of Excellence:

ey.com/ipocenter

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